FTSE falters in morning trading

A luke-warm response to the Bank of England’s £50bn (€62.4) bail-out for the banking sector left the London market treading water today.

The FTSE 100 Index pared back earlier gains after the Bank announced its asset-swapping scheme for banks to trade their riskier investments for Government-backed bonds to ease the impact of the credit crunch.

Initial disappointment over the one-off nature of the Bank’s scheme filtered through to markets, with the Footsie just 10.9 points higher at 6067.4.

With the main details of the scheme trailed well in advance, there were few surprises for investors and the FTSE 350 banking sector was more than 1% down following the move.

The leading faller in the sector was Royal Bank of Scotland, which fell more than 2%, or 8.75p, to 375.25p after confirming that it was considering asking shareholders for more cash in a rights issue later this week.

Other major banking stocks which slipped after early gains included Barclays, off 9.75p to 486.25p. while Halifax Bank of Scotland was unchanged at 558p after gains of 18p earlier.

Alliance & Leicester was up 4p at 537p, but failed to cling on to its initial gains.

Housebuilders also made a bright start on the news of potential help for the housing market, with Persimmon up 8.5p to 696p. FTSE 250 stocks Taylor Wimpey and Redrow gained 1.25p to 160.25p and 3.25p to 293.25p respectively.

The leading Footsie riser was broadcaster ITV, up almost 8%, or 5.6p to 69.6p on reports that German broadcaster RTL could be interested in buying BSkyB’s controversial stake in the broadcaster.

Record oil prices above 117 US dollars a barrel also lifted Royal Dutch Shell 33p to 1932p and BP 10.5p to 578.5p.

But the oil costs were bad news for airline British Airways, down 6.25p at 217.5p.

Other leading fallers included Dairy Milk maker Cadbury Schweppes, down 9p to 564.5p after its Swiss rival Nestle stepped up the heat with an upbeat trading statement.

Nestle’s better than expected sales contrasted with Cadbury’s recent news, which disappointed the market two weeks ago.